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When the stock market crashed 508 points in a single day back in 1987, Nicholas Brady was asked to investigate. At the time, Brady was chairman of Dillon Read; later he became secretary of the treasury. While he had no particular training for this new role, his life in markets had made him confident when talking to experts. Brady explained his view of his task to a newspaper reporter in roughly this way: to sit there and watch the river, and wonder why it changes course. In due time, his task force recommended a number of measures, including several designed to improve the links between various markets. Most of those suggestions were adopted; we haven’t had any significant trouble since. Thus do we assign special duties to our wise old heads.

Some of the wisest heads among us are historians. We expect them to work harder than investment bankers to understand change—mastering languages, traveling widely, reading deeply, studying and resolving competing claims, and illuminating areas of the past. They are supposed to engage easily with experts of many sorts—economists, anthropologists, sociologists, linguists, geographers, climatologists, population biologists, geneticists—but must never surrender their judgments to any of them. Historians are supposed to take all into account in order to reach their own conclusions about the flow of the river, about where the world is going. Historians are the ultimate consultants to the world.

The task of gauging the flow of the river of economic development, of judging where the countries of the world are going, is one of great importance. No one who travels can fail to be amazed by the differences from place to place. (Nor by the similarities—the business hotel room, for instance, is now pretty much the same all over the world.) Hong Kong, a barren outcropping of rock on the southern coast of China, has a per capita income many hundreds of times that of cities on the fertile coasts of Africa. The average citizen of Mexico City, which has a population of 16 million, lives only a tenth as well as someone in Peoria, Illinois, which is home to only 110,000 people.

Moreover, economic leadership among nations is clearly a mantle that passes from place to place over time. The last thousand years have seen global primacy pass from China to the Italian city-states, to Portugal and Spain, to the Low Countries, to Britain, and then to the United States. Which will be next in the van?

Historians are especially useful investigators of these issues, for there is a world of difference between the methods of history and those of social science. The scientist’s cardinal rule is to ask no question larger than can be answered with something approaching certainty; that is how the community builds the consensus that is the secret of its success. For precisely this reason, the conclusions of scientists, including those of economists, should always be conveyed with a prominent disclaimer: Warning! Contains only part of the answer.

Historians, in contrast, at least those at the top of the food chain, seek to see matters whole. They fashion an account of events that suits our sense of what constitutes a full explanation. Plenty of historians are engaged in narrow enterprises: When did spoke wheels first replace solid ones? What was Talleyrand thinking at the Congress of Vienna? But even here, the kind of once-and-for-all certainty that is the elixir of scientists eludes historians. They don’t try to prove things the way that scientists do; historians’ claims rest instead upon their wisdom and moral authority. They are prone to be captive to the spirit of their age, of course, so our histories must periodically be rethought and rewritten.

This is where the new book by David Landes, The Wealth and Poverty of Nations, comes in. It bids to become the standard world economic history. With its echo of Adam Smith, the title is deceptive: the book is a work of history, not a treatise on economics. It is a story about the last thousand years—a glorious plum pudding of anecdote and analysis about nations and cultures in the modern world, gracefully harnessed in a powerful narrative. But it is a special kind of story, one that Landes has submitted to the most searching scrutiny by professional historians for the past 15 years. If you have the time to invest, you can scarcely do better than to read it, for it is a gripping tale, and it is unlikely to be supplanted or surpassed anytime soon.

The Setting of the History

Many other books by distinguished scholars cover this same wealth-of-nations ground from various angles. To name a few of the most prominent: Michael Porter’s The Competitive Advantage of Nations offers an analytic framework with which to view practical issues of development. Charles Kindleberger’s World Economic Primacy: 1500–1990 searches history for patterns of rise and decline. Thomas K. McCraw’s Creating Modern Capitalism zeroes in on the role of large corporations in fomenting recent economic growth. And Nathan Rosenberg and L.E. Birdzell, Jr.’s How The West Grew Rich concentrates on the role that institutions in the broadest sense—such as common law, public science, and private property—played in giving advantages to the West in global competition. All of these are eminently worthwhile. And there are dozens of other such histories. What is it that sets Landes’s book apart? It is the ambition that is hinted at in his title: a determination to tell the story whole.

A few words first about Landes’s credentials as a global historian. A professor emeritus of history and economics at Harvard University, Landes is the author of just three previous books. His doctoral thesis, Bankers and Pashas, was a study of colonial interdependence in the building of the Suez Canal. The Unbound Prometheus has been the standard history of the Industrial Revolution since its publication in 1969. Revolution in Time is a lively history of the invention of timekeeping—mechanical, then electronic—and the social and economic consequences that flowed from the steady stream of innovations.

Landes was born to modest wealth in Brooklyn, and he went into history instead of the family business, which was real estate, with the blessing of his father. After a stint in the army, he attended graduate school, then taught at the University of California at Berkeley for six years. He developed a reputation for being curious, diligent, tough-minded, and just plain tough.

Landes came to teach at Harvard in 1964, just weeks before the first incidents of the Free Speech movement at Berkeley, and soon after two books appeared that were to have even more far-reaching consequences to the community of professional historians than would the student revolt. William McNeill’s The Rise of the West came out in 1963, and Thomas Kuhn’s The Structure of Scientific Revolutions appeared in 1962 (though its impact came later).

Presumably, McNeill’s tome is the book that Landes’s The Wealth and Poverty of Nations now seeks to replace. For 35 years, it has been the most influential work of global history. A sleeper when it first appeared, The Rise of the West briefly hit the best-seller lists (just as Landes’s book has today) and has gained in stature—and sparked disagreements—ever since. It was said to be the most learned and imaginative attempt to recount and explain the whole history of mankind. Probably it still is.

McNeill’s goal was to counter the between-the-wars pessimism found in Arnold Toynbee’s A Study of History, and he succeeded. Instead of the rise and inevitable decline of a series of essentially isolated civilizations, McNeill presented a saga in which interaction between strangers possessing different skills was the mainspring of historical change. “The rise of the West” was indeed an effective shorthand description of the whole of history to that date. McNeill was shrewd in his judgments, such as his prediction that the hold of communism could not last. But his book had shortcomings as well.

For one thing, The Rise of the West manifested a faint but unmistakable triumphalism that limited its ultimate appeal—it underestimated the degree of Chinese primacy in the years between 1000 and 1500, for example, and dwelt disproportionately on the rise of Greece and Rome. For another, McNeill neglected the rise of a cosmopolitan world culture in favor of telling the story of the flowering of one civilization after another, leaving him vulnerable to critics who pointed to the significance of the rise of transnational systems of production. Still, the book influenced textbook writers, served as a foil for European historians such as Immanuel Waller-stein, was republished in 1991, and in a way, dominated the minds of the lay audience for the whole of Landes’s adult career.

Kuhn’s effect on history is harder to describe, and I will not assess it here, except to say that many people in the academy and elsewhere believe his landmark book has been somehow responsible for letting loose the twentieth century from its historical moorings. On the surface, The Structure of Scientific Revolutions simply described a pattern for the emergence of particular communities sharing scientific theories. But by showing scientific revolutions to be wholesale changes in worldview, he seemed to undermine the conviction that one way of looking at the world was to be preferred to any other. Judgment, readers inferred, was simply a matter of the paradigm to which one subscribed. Anthropologists had been arguing for years that “primitive” was not intrinsically different from “advanced.” Kuhn’s vision seemed to suggest that even in science, there was no such thing as “progress”; that conflicting views should be given equal footing. (Kuhn himself did not believe this was the case.) The result was the profound openness we now know as multiculturalism.

This great theme—the emergence of radical doubt—is the shock with which Landes contended in writing his latest book, the historical equivalent of that remarkable break in the stock market that concerned Nicholas Brady. Having listened to the multiculturalists for 30 years, Landes stands his Eurocentric ground. Thanks to the work of a generation of specialists, he understands better than did McNeill the remarkable burst of invention that occurred in China at the beginning of the present millennium. Paper, printing, the wheelbarrow, the compass, gunpowder, the stirrup, the rigid horse collar (to prevent choking), porcelain—all of these were invented there. But the Chinese were reluctant improvers and bad learners, he says. The state intruded on the process of economic growth and knowledge accumulation at every juncture. Islam fares no better in Landes’s account: the earliest clocks were rejected because they might undermine the authority of the muezzins who called the faithful to prayer.

Landes has listened to the multiculturalists but stands his Eurocentric ground.

Landes is no apologist for capitalism, whose shortcomings with respect to fairness he presents regularly. But he is merciless on the ecological and economic disaster that was the Soviet Union. “Pretense and promises are vulnerable to truth and experience,” he writes. “When the dream vanished, when people came to know the difference between the systems, communism lost its legitimacy. The walls came down and the Soviet Union collapsed, not by revolution, but of abandonment.” Freed of the intellectual pressures of the Cold War, Landes all but ignores the Russian Revolution, an event that seemed such a crucial watershed to McNeill. But he reaches roughly the same conclusions as his predecessor about the economic successes of the Europeans over the last 1,000 years—a miracle whose beginnings he ascribes to a favorable climate.

The Power of Culture

Landes’s story starts with a series of explanations as to why it is that the rich countries of the world are located almost without exception in the world’s temperate zones. Landes does not mean to say that prosperity and even leadership might not spread in due course to the equatorial latitudes: witness Singapore. But he argues that the disease and personal torpor prevalent in steamy climes account for much of the observed pattern of development so far. As for air conditioning, when he says “it simply redistributes the heat from the fortunate to the unfortunate,” he comes perilously close to the geographic determinism that some readers ascribe to his book. But since he is writing about Atlanta, Houston, and New Orleans, we know he doesn’t mean it. Some people have a weakness for chocolate; Landes for the snappy line.

Landes moves on to the question of why Europe took off into modernity but China, another temperate area, did not. Again, geography explains much. The loamy soil of the north China plain required extensive irrigation to produce rice, and rice produced bountiful harvests—as long as it was tenderly cultivated. Hence the logic of early and universal marriage, lots of children, and big armies to provide and protect the irrigation. That takes food, and the food in turn takes people. Writes Landes: “Treadmill.”

In contrast, Europe’s hardwood forests put severe limits on family size. Also, the settlers brought memories of ancient cultures—the Greek idea of democracy as an alternative to despotism, the Jewish tradition of private property, and the Christian distinction between the sacred and the secular—all of which gave rise to semiautonomous cities organized around commerce. Europe did not have all of its eggs in one basket; highly fragmented, it could try many experiments neously, and was immune from conquest at a single stroke.

Once they survived the plagues of the thirteenth and fourteenth centuries, the Europeans turned to the ocean. The Spanish and the Portuguese advanced by island hopping: first to the Madeira and Canary Islands, next to the Azores and the Cape Verde Islands, and down the coast of Africa around the Cape of Good Hope. Soon they reached the New World, which lay wide open to European curiosity and dreams. The germs they brought with them greatly aided their conquest—far more Native American peoples died from smallpox than from European swords.

About the same time as the western voyages of discovery, those who traveled east—the Dutch, the Portuguese, the Spanish, the British, and the French—made an astonishing discovery. Having themselves reached unprecedented levels of wealth and development, the Chinese were essentially uninterested in the voyagers from the West. The Celestial Kingdom had become lost in its own world, its science stagnating, its expansionist impulse checked by a nervous central government. By the sixteenth century, it was a capital offense to put to sea in a multimasted boat.

The Industrial Revolution took root in Britain. Why not France, which was much larger? Because Britain trained its labor force and accumulated capital as it went along; it also decentralized authority. Landes relentlessly makes the point that development belongs to those who succeed in ending the petty tyrannies of the state. As recently as the 1920s, Parisian officials forced motorists returning to the city to submit to dipstick measurement of their gas tanks, the better to tax any fuel that might have been bought outside the gates. The British spread to the colnies, where the large local market gave rise to the “American” system of manufacturing, that is, using interchangeable parts. Before half a century had passed, the model spread to Japan. And so on.

Other countries and regions fell short in economic development. For instance, the Spanish failed to advance because their American windfall spared them the necessity of change. The wealthy Dutch lost their nerve. Islam, a religion of enormous vitality, nevertheless failed to motivate much in the way of modern development. Why? Landes surveys India’s Moghul empire and Turkey’s Ottoman empire and argues that, in each case, the key to failure lay in the fact that in Muslim dogma, faith was enough for salvation; no further sign of grace, such as worldly wealth, was required. Islam’s single greatest mistake was shunning the printing press, Landes argues. Although that step may have helped to preserve orthodoxy, nothing did more to ensure that the lands it converted would become intellectual backwaters.

These are old ideas brought up to date. For example, the notion that centralized control of water held China back was explored by Montesquieu, Hegel, and Marx before it became associated with the phrase “Oriental despotism” coined by Karl Wittfogel. So loaded, that concept proved easy to attack, and it was banished from the textbooks as politically incorrect. Similarly, Max Weber’s connection between the Protestant ethic and the spirit of capitalism is rescued from the historian’s dustbin by Landes’s confident and subtle reading. The Protestant Reformation changed the rules, says Landes. “It gave a big boost to literacy, spawned dissents and heresies, and promoted the skepticism and refusal of authority that is at the heart of the scientific endeavor.”

Values and Economists

Landes’s account is worth reading on different levels. Besides his ambitious scope, jaunty prose, bright palette, and encyclopedic knowledge, his passion to win the argument (or at least to spell it out) surpasses other historians’ on the subject. But there is also the matter of his intuition.

Landes is a historian first, but he has spent much of his life around economists, including a banner year in 1957 at Stanford University’s Center for Advanced Study in the Behavioral Sciences, where his classmates included Kenneth Arrow, Milton Friedman, George Stigler, and Robert Solow. That means his grasp of questions that interest economists, but which they find difficult to tackle, is very good. True, he often disparages their ambition—“economic analysis cherishes the illusion that one good reason should be enough.” But he understands what it means to isolate a variable that casts into sharp relief some important part of the story. Indeed, you can think of his narrative as what Landes produced instead of the economic theory that could have merited a Nobel Prize.

Thus The Unbound Prometheus anticipated by more than a decade the furious developments in technical economics now known as new growth theory. Long before the wave of excitement about the increase of knowledge swept through economics in the 1980s, Landes had turned his searchlight on the centrality of entrepreneurs and inventors. If you read the book even now, it will be far more illuminating than a similar number of hours spent slaving over exemplary texts in new growth theory. This is not to disparage economists’ formalist approach, just to say that it takes time to extract the best from it, whereas morals emerge easily from Landes’s stories.

For example, the gospel of openness to new ideas—meaning a willingness to adopt best practices from abroad, whatever the injury to established interests—is one of the chief teachings of the new theory of economic growth. (The old theory held that investment was enough for sustained growth.) How much more vividly does Landes make the point in his new book by relating the slow-growth history of Spain: a Valencian physician in the 1680s, lamenting his failure to persuade colleagues to discard the long-standing Galenist doctrine in favor of Harvey’s discovery of the circulation of the blood, wrote, it is “as if we were Indians, always the last” to learn of new knowledge.

In a similar way, Landes’s emphasis on culture and institutions anticipates much that may transpire in economics over the next 20 years. Technical economics is on the verge of “endogenizing” tastes and preferences, which is a fancy way of saying that economists have begun to turn their attention to those inner values and attitudes that Landes finds have been so important throughout world history. Why not spare yourself the difficulty of keeping up with what promises to be a stormy set of developments in the technical literature by reading The Wealth and Poverty of Nations now?

Landes’s emphasis on culture anticipates much of what may transpire in economics over the next 20 years.

“If we learn anything from the history of economic development, it is that culture makes all the difference,” Landes concludes. Controlled experiments are everywhere: the Chinese in Southeast Asia, Indians in East Africa, Lebanese in West Africa, Jews and Calvinists and Quakers in much of Europe. The inner beliefs that inspire populations in their daily lives are intimately linked to worldly success.

How have these communities maintained their core values over time, rejecting some new ideas while embracing others? Into this mystery Landes does not delve. Yet this is the fundamental question that lies at the heart of understanding the flow of the river of economic development.

Which nation will be next in the van? If it were just a matter of scale and the adoption of the latest technology, the answer would be China, the biggest market in the world. But China has a history of sacrificing technology and trade to the goals of the state, says Landes. Remember that Chinese law against ocean-going vessels? Technology trumps geography, but culture trumps technology—for good and ill.

A version of this article appeared in the July–August 1998 issue of Harvard Business Review.